(Bloomberg) -- The weather is giving golf a chill.
Callaway Golf Co. fell the most in more than a year Wednesday after an analyst at DA Davidson & Co. downgraded the company’s shares to neutral from buy.
The prolonged winter weather is stifling early-season visits to courses, which may lead to more promotional activity and a smaller window to sell golf goods, analyst Andrew Burns said in a note. The cold, coupled with strong new golf gear from rival brands Titleist, TaylorMade and Ping, crimps potential gains for Callaway, he said.
“While we usually do not place a lot of emphasis on early season rounds played, we believe this persistent year-over-year decline creates limited visibility to upside scenarios,” he said. Rounds played through February were down 7.2 percent compared with the same period a year ago, Burns said, citing researcher Golf Datatech.
Callaway shares fell as much as 7.7 percent to $16.35 in New York, the biggest intraday drop since February 2017. The shares had gained 27 percent this year through Tuesday’s close.
Golf has enjoyed a bump in television viewers since the return of faded star Tiger Woods earlier this year, but aside from his sponsors, it hasn’t changed much for golf’s core industry. The 42-year-old Woods remains golf’s strongest draw, rather than younger up-and-coming players. Golf was in a better state during his heyday more than a decade ago.
In 2016, the U.S. had 23.8 million golfers, down more than 22 percent from its peak of 30.6 million in 2003, according to the National Golf Foundation. Even so, the golf industry is healthier than it was a few years ago. Retailers focused on becoming leaner, shedding excess inventory as hundreds of golf courses closed across the country.
“However, with unfavorable weather through April and compelling product stories across all top brands, we see a more dynamic competitive environment emerging,” Burns said.
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